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Probate Cost

How to Minimize Legal Fees After Death

Death is a costly business.  Aside from funeral expenses, legal fees can take a big chunk out of how much is left for your loved ones after you’re gone.

But it doesn’t have to be this way.  Careful planning can minimize the legal fees your loved ones will pay after you die.  Here’s how:

  1. Make an estate plan – The cost of creating an estate plan will be far less than the legal fees your loved ones will have to pay if you don’t have one.  But be careful – don’t try to write your own will or revocable living trust.  Do-it-yourself or online plans often fail to include valuable cost, tax, and legal fee saving opportunities.  You need the advice and assistance of an experienced estate planning attorney to create an estate plan that will work when it’s needed and minimize legal fees after your death.
  2. Maintain your estate plan – Once you’ve created your estate plan, don’t stick it in a drawer and forget about it.  Instead, fine tune your plan as your life and your finances change.  Otherwise, when your plan is needed, it will be stale and out of date and will cost your beneficiaries time and legal fees to fix it.  In a worst case scenario, a stale plan could lead to expensive and emotionally draining litigation between your family members.  Regular maintenance of your estate plan makes it easier to carry out when needed.
  3. Have a debt plan – Make a plan for paying off your debts and taxes after you die.  This should include setting aside funds that your loved ones will have easy access to (for example, set up a joint bank account or a payable on death account) so that they won’t have to use their own assets to pay your bills until your will can be probated or the successor trustee of your trust can be appointed.  If your estate is taxable, then make sure you have enough assets that can be easily liquidated to pay the estate tax bill.  Life insurance can be another option for providing easy access to cash and paying estate taxes, but it’s important that you align your life insurance plan with your estate plan to get the maximum benefit.
  4. Let your loved ones know where your estate plan and other important documents are located – If your loved ones don’t know where to find your health care directive, durable power of attorney, will, or revocable living trust, then their hands will be tied if you become incapacitated or die.  While you don’t need to tell your loved ones what your estate plan says, at the very least you should tell someone you trust where your estate plan and other important documents are being stored.  You should also make a list of the passwords for your computer and accounts you manage online and a contact list for all of your key advisors (such as your attorney, accountant, life insurance agent, financial advisor, banker, and religious advisor).

Following these practical tips will save your family valuable time and money during a difficult time.

Skyrocketing Probate Fees – Another Reason to Avoid Probate Court

As of July 1, 2015, Connecticut probate courts earned the dubious distinction of charging the highest probate fees in the U.S..  Amazingly, the Connecticut legislature voted to completely cut general fund support for the state’s probate courts for the next two fiscal years, thereby creating a $32 million deficit.  In order to cover the shortfall, the fees charged for settling a deceased person’s estate in Connecticut were significantly increased and the $12,500 cap on probate fees was eliminated.  To make matters worse, these changes apply retroactively to all deaths dating back to January 1, 2015.  As a result, it is estimated that a handful of Connecticut estates will owe in excess of $1 million in probate fees and at least a dozen will owe in excess of $100,000.

Which Other States Also Charge High Probate Fees?

Connecticut’s new fee structure assesses a 0.5 percent fee on estates worth more than $2 million and most probate court filing fees were also increased from $150 to $225.  While both North Carolina and New Jersey assess probate fees of 0.4 percent, North Carolina’s fee is capped at $6,000 but New Jersey does not have a cap.  In Maryland the probate fee for an estate valued between $2 million and $5 million is $2,500 and for estates valued over $5 million the fee is $2,500 plus .02 percent of the excess over $5 million.

How Can Your Loved Ones Avoid Paying Probate Court Fees?

Even if you don’t live in a state that charges high probate fees now, budget shortfalls and fee changes could occur at any time. Also, in most situations it’s easy to keep your estate out of probate court and avoid all of the fees and costs associated with it:

  • Gift your estate while you’re still alive. While it really isn’t practical to give all of your assets away during your lifetime, it is possible to gift assets into a special type of trust or a family business entity of which you can be a beneficiary or stakeholder.
  • Own property jointly with others. If an asset such as a home is owned by two people as joint tenants with rights of survivorship and one of the owners dies, the surviving owner will become the sole owner of the home outside of probate.
  • Use beneficiary designations. By design life insurance and retirement accounts (such as IRAs, 401(k)s and annuities) avoid probate through the designation of a beneficiary.  In addition, you can name a beneficiary for your bank accounts using a payable on death account and for your investment accounts using a transfer on death account.
  • Create and fund a revocable living trust. When you create a revocable living trust and transfer the title of your assets into the name of the trust, you will no longer hold title to your assets in your individual name.  Instead, your assets will be converted into property under the control of the Trustee (which can be you while you’re alive and a spouse, child, friend or bank after you die).  After you die, the property held in the trust will pass to the beneficiaries you name in the trust agreement outside of probate.

Final Thoughts on Avoiding Probate Court

While probate is easy to avoid using any of the methods described above, there are pros and cons that need to be considered for each method.  Please contact our office if you are interested in determining the best way for your estate to avoid probate court and all of the fees and costs associated with it.